7 hard lessons first-time business owners learn

Business, Money

While growing a business is never easy, part of the satisfaction is in learning and growing as a business owner along the way. However, there are some frequent pain points first-time business owners encounter that are better learned from the hard experiences of others.

1. Administrative tasks matter

When you’re excited about a business idea, you want to start developing your business, not filling out paperwork for permits. But while administrative paperwork won’t help your business grow, failure to take care of these details can actually kill your business if an inspector shows up, or if a customer complaint uncovers deeper problems. The Small Business Administration has a good portal to make sure your business is sound, or you can consult with a legal service for more help launching an LLC or forming an S Corp.

2. Don’t wait for cash flow pain to get business financing

Unfortunately, the saying that “it takes money to make money” has some truth to it. If you get paid for a service upfront, congratulations: the majority of business owners are jealous of you. For most businesses, though, the cash cycle starts by spending money on inventory, payroll, or equipment and then getting paid after the goods or services are delivered.

Growing businesses frequently get into a situation where their bank balance is low not because business is bad, but because they are waiting to collect payment on work – the Federal Reserve reported that cash flow was the number one concern for small businesses in 2015. Nothing is more disappointing than turning down a $100,000 contract because you don’t have the $50,000 it would require to get the job done.

Getting access to small business financing – whether it be a line of credit or a more sophisticated solution like financing invoicesbefore you hit a cash flow crunch will make all the difference to your growth momentum.

3. Hire slow, fire fast

Good employees are critical for any business, but this is even more true at a small business where each individual has lots of influence over the culture of the company and its customers’ perceptions of the business. Spend the time to hire someone you think will be a good fit for your company, not just someone who has the right resume.

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Conversely, employees who are underperforming or who bring a bad attitude to work end up negatively influencing the rest of the organization. Sooner or later, you will find yourself patching things over or apologizing for them, and they will most likely be happier at another organization, too. “Culture is everything. One single negative person can corrupt a culture. You should never delay to cut cancer out of your organization,” said Michael Weissman of Synqy. Understand when it’s time to make the tough call and let someone go so you can focus on moving forward.

4. Retaining great employees always beats replacing them

It takes time to find a good employee, and they can make a tremendous impact on your organization. But because you trust them to get anything done, it can also be easy to take them for granted while simultaneously leaning on them for a lot.

This combination can cause your star employees to start looking elsewhere. Great employees are always hard to find, and the replacement search will take valuable time away from your ability to manage and grow your business day-to-day. Instead, make sure that you make these employees feel valued for their contributions – which is more effective than giving them a raise or a bonus.

5. Don’t be afraid to fire customers

Early on, you welcome any new customer with open arms. But eventually you may find that you have a few customers who, together, occupy the majority of your time and account for the majority of your headaches. While “the customer is always right” may be a common adage, it can also be a recipe for distracting stress.

If you find yourself in this position, it may be time to politely enforce your priorities by not responding to calls to your cell phone after hours, or telling someone that no, you can’t come out for a 10th consultation before they decide on whether to proceed. It may even be worth sending the person elsewhere – including to a competitor – if it frees up your time and focus to grow your business with other customers.

6. Be prepared for the naysayers

Daniel Henderson of Iconic LED learned that starting a business can impact personal relationships — whether or not it is successful. “When I started Iconic I thought that most of my friends and family would be excited for me to go out on my own and build my own company,” said Henderson, “but family questioned why I left a stable job and urged me to go back hat in hand, and former industry partners tried to put me out of business before I began.”

Henderson persevered, and says the experience has given him a greater level of discernment and has increased the value he puts on hiring people who will be a good cultural fit at Iconic. But as an entrepreneur, count the cost and be mentally prepared to deal with challenges in relationships, not just in your business.

7. But don’t forget to enjoy the journey

Being a small business owner comes with stress, particularly for first-timers. But no one starts a business accidentally. When the going gets tough and it’s easy to focus on the negative, make sure to remind yourself of why you started your business and take a moment to be proud of what you have accomplished and what you are learning.